Mechanism Designs to Mitigate Disparities in Online Platforms: Evidence from Empirical Studies

Abstract

With the rising ubiquity of online platforms, there is an increasing focus on platforms’ role in enabling fair exchanges between buyers and sellers. Traditionally, platforms have inbuilt mechanisms such as screening or upfront data-gathering disclosure that encourage transactions between unfamiliar participants. Since such mechanisms can introduce power disparities between different sides, platforms have enacted policy changes to fix the imbalance. Extant literature hasn’t studied the unintended consequences of such policy changes. My dissertation seeks to fill this gap by examining platforms’ decisions to enact policy/mechanism changes that level the playing field by decentralizing choices for different sides. Using empirical studies, my dissertation seeks to causally identify the impact of such changes on outcomes for participants as well as for the platform. The first essay in my dissertation examines the impact Airbnb’s decision to make screening optional. There is increasing evidence that two-way screening mechanism has been used as a tool by users on the platform to discriminate against some users on the other side. In making screening optional, I find that African American hosts and female hosts are more likely to forgo screening and they benefit the most (in terms of occupancy, price and/or ratings) from forgoing screening, indicating that making screening optional can serve as a useful mechanism in helping alleviate reverse discrimination of hosts by guests. The second essay studies platforms’ attempts to provide smartphone users with better choice over which sensitive information can mobile apps access. In particular, I examine the timing of mobile apps' decisions to upgrade to Android 6.0, which restricts the ability of mobile apps from seeking blanket permissions to sensitive user information at download, instead requiring them to request à la carte permissions at run-time. I find that apps that over-seek (access information that are non-essential to their functionality) sensitive information from users strategically delay upgrading to Android 6.0. However, these apps suffer popularity and reputational costs in the Android marketplace. Collectively, the findings in my dissertation provides valuable theoretical as well as practical insights about the welfare implications of choice decentralization on all sides in online platforms, not just the intended side.